MORGAN STANLEY

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Management’s Discussion and Analysis

Executive Summary

Overview of Financial Results

Consolidated Results—Three Months Ended September 30, 2026

•The Firm reported net revenues of $20.3 billion and pre-tax income of $6.5 billion, demonstrating the strength of our Integrated Firm.

•The Firm delivered ROE of 17.8% and ROTCE of 22.6% (see “Selected Non-GAAP Financial Information” herein).

•The expense efficiency ratio was 67% for the third quarter and 66% for the year-to-date, demonstrating operating leverage while we continued to invest in our businesses.

•At September 30, 2026, the Firm’s Standardized Common Equity Tier 1 capital ratio was 14.9%.

•Institutional Securities reported net revenues of $10.0 billion, primarily reflecting strong results in Equity and higher Advisory revenues.

•Wealth Management delivered net revenues of $9.1 billion, reflecting strong Asset management revenues and higher Net interest income, generating a pre-tax margin of 30.4%. The quarter included net new assets of $232 billion and fee-based flows of $80 billion.

•Investment Management reported net revenues of $1.5 billion, primarily driven by asset management fees on higher average AUM. The quarter included positive long-term net flows of $15.8 billion.

Net Income Applicable to Morgan Stanley

Earnings per Diluted Common Share

We reported net revenues of $20.3 billion in the quarter ended September 30, 2026 (“current quarter,” or “3Q 2026”), which increased by 12% compared with $18.2 billion in the quarter ended September 30, 2025 (“prior year quarter,” or “3Q 2025”). Net income applicable to Morgan Stanley was $4.9 billion in the current quarter, which increased by 6% compared with $4.6 billion in the prior year quarter. Diluted earnings per common share was $3.03 in the current quarter, which increased by 8% compared with $2.80 in the prior year quarter.

We reported net revenues of $62.3 billion in the nine months ended September 30, 2026 (“current year period,” or “YTD 2026”), which increased by 18% compared with $52.8 billion in the nine months ended September 30, 2025 (“prior year period,” or “YTD 2025”). Net income applicable to Morgan Stanley was $16.1 billion in the current year period, which increased by 29% compared with $12.5 billion in the prior year period. Diluted earnings per common share was $9.93 in the current year period, which increased by 32% compared with $7.53 in the prior year period.

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Management’s Discussion and Analysis

•Compensation and benefits expenses of $7,997 million in the current quarter and $24,726 million in the current year period increased 7% and 12%, respectively, compared with the prior year periods, primarily due to higher revenues leading to an increase in the payout to Wealth Management advisors and higher discretionary incentive compensation within Institutional Securities.

During the current year period, as a result of a March workforce management action, we recognized severance costs of $178 million in Compensation and benefits expense. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary” in the Form 10-Q for the quarter ended March 31, 2026.

•Non-compensation expenses of $5,715 million in the current quarter and $16,359 million in the current year period increased 20% and 16%, respectively, compared with the prior year periods, primarily due to higher execution-related expenses, increased technology spend and higher marketing and business development costs.

The Provision for credit losses on loans and lending commitments of $148 million in the current quarter was primarily related to growth in corporate loans and secured lending portfolios. The Provision for credit losses on loans and lending commitments was $0 million in 3Q 2025, reflecting growth in corporate loans and secured lending portfolios and provisions for certain specific commercial real estate loans, offset by improvements in the macroeconomic outlook.

The Provision for credit losses on loans and lending commitments of $344 million in the current year period was primarily related to growth in corporate loans and secured lending portfolios and provisions for certain specific commercial real estate and corporate loans. The Provision for credit losses on loans and lending commitments in YTD 2025 was $331 million, primarily related to growth in corporate

loans and secured lending portfolios and provisions for certain specific commercial real estate loans.

Business Segment Results

Net Revenues by Segment 1

Net Income Applicable to Morgan Stanley by Segment 1

1. The amounts in the charts represent the contribution of each business segment to the total of the applicable financial category and may not sum to the total presented on top of the bars due to intersegment eliminations. See Note 19 to the financial statements for details of intersegment eliminations.

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Management’s Discussion and Analysis

•Institutional Securities net revenues of $10,029 million in the current quarter and $31,790 million in the current year period increased 18% and 26%, respectively, compared with the prior year periods, primarily reflecting strong results in Equity on increased client activity and higher Investment Banking results on Advisory revenues.

•Wealth Management net revenues of $9,065 million in the current quarter and $26,440 million in the current year period increased 10% and 13%, respectively, compared with the prior year periods, primarily reflecting higher Asset management revenues on higher market levels and the cumulative impact of positive fee-based flows and increased Net interest income.

•Investment Management net revenues of $1,459 million in the current quarter and $4,640 million in the current year period decreased 12% and 3%, respectively, compared with the prior year periods, primarily reflecting a decrease in Performance-based income and other revenues, partially offset by an increase in Asset management and related fees.

Net Revenues by Region 1

1. For a discussion of how the geographic breakdown of net revenues is determined, see Note 22 to the financial statements in the 2025 Form 10-K.

•Americas net revenues increased 6% in the current quarter compared with the prior year quarter, primarily driven by higher Asset management revenues and increased Net interest income within the Wealth Management business segment and higher Investment Banking and Equity results, partially offset by lower Fixed Income results within the Institutional Securities business segment. Americas net revenues increased 13% in the current year period compared with the prior year period, driven by higher results across business segments.

•EMEA net revenues decreased 6% in the current quarter compared with the prior year quarter, primarily driven by lower Investment Banking revenues within the Institutional Securities business segment and lower results within the Investment Management business segment, partially offset by higher results in Equity within the Institutional Securities business segment. EMEA net revenues increased 7% in the current year period compared with the prior year

period, primarily driven by higher results in our Markets business within the Institutional Securities business segment, partially offset by lower revenues within the Investment Management business segment.

•Asia net revenues increased 55% and 56% in the current quarter and in the current year period, respectively, compared with the prior year periods, primarily driven by strong results in Equity within the Institutional Securities business segment.

Selected Financial Information and Other Statistical Data

1. The expense efficiency ratio represents total non-interest expenses as a percentage of net revenues.

2. ROE and ROTCE represent annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity and average tangible common equity, respectively.

3. Represents a non-GAAP financial measure. See “Selected Non-GAAP Financial Information” herein.

4. Pre-tax margin represents income before provision for income taxes as a percentage of net revenues.

5. For a discussion of Liquidity resources, see “Liquidity and Capital Resources—Balance Sheet—Liquidity Risk Management Framework—Liquidity Resources” herein.

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Management’s Discussion and Analysis

6. Includes loans held for investment, net of ACL, loans held for sale and also includes loans at fair value, which are included in Trading assets in the balance sheet.

7. Book value per common share and tangible book value per common share equal common equity and tangible common equity, respectively, divided by common shares outstanding.

8. Client assets represents the sum of Wealth Management client assets and Investment Management AUM. Certain Wealth Management client assets, totaling $378 billion and $350 billion as of September 30, 2026 and December 31, 2025, respectively, are invested in Investment Management products and are therefore also included in Investment Management’s AUM.

9. For a discussion of our capital ratios, see “Liquidity and Capital Resources—Regulatory Requirements” herein.

Economic and Market Conditions

The environment in the third quarter of 2026 was characterized by strong levels of activity early in the quarter, continuing the momentum observed in the second quarter, with markets focused on AI investment and economic expansion. Activity moderated later in the quarter against a backdrop of renewed geopolitical tensions, higher interest rates and rising energy prices. Geopolitical risk, inflation, the rate of economic growth, the future path of monetary policy and the path of AI build-out and acceptance represent ongoing uncertainties which could continue to impact the capital markets and our businesses.

For more information on economic and market conditions, and the potential effects of geopolitical events on our future results, refer to “Risk Factors” and “Forward-Looking Statements” in the 2025 Form 10-K.

Selected Non-GAAP Financial Information

We prepare our financial statements using U.S. GAAP. From time to time, we may disclose certain “non-GAAP financial measures” in this document or in the course of our earnings releases, earnings and other conference calls, financial presentations, definitive proxy statements and other public disclosures. A “non-GAAP financial measure” excludes, or includes, amounts from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. We consider the non-GAAP financial measures we disclose to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an alternate means of assessing or comparing our financial condition, operating results and capital adequacy.

These measures are not in accordance with, or a substitute for, U.S. GAAP and may be different from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally define it or present the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, along with a reconciliation of the differences between the U.S. GAAP financial measure and the non-GAAP financial measure.

For the prior year periods, we present certain non-GAAP financial measures that exclude the impact of mark-to-market gains and losses on DCP investments from net revenues and compensation expenses. The impact of DCP is primarily reflected in our Wealth Management business segment results. These measures allow for better comparability of

period-to-period underlying operating performance and revenue trends, especially in our Wealth Management business segment. By excluding the impact of these items, we are better able to describe the business drivers and resulting impact to net revenues and corresponding change to the associated compensation expenses for the prior year period.

Beginning in the first quarter of 2026, derivatives were designated as cash flow hedges of the equity price risk associated with the majority of unvested DCP awards within our Wealth Management business segment. Changes in fair value of these cash flow hedging derivatives are recorded in OCI and subsequently reclassified into compensation expense in the same period that the related DCP award vests and is recognized in compensation expense.

Additionally, in the first quarter of 2026, we commenced the use of derivatives as economic hedges of the equity price risk primarily associated with the vested DCP awards within our Wealth Management business segment. The Firm presents changes in the fair value of these economic derivative hedges in compensation expense.

Previously, the Firm economically hedged DCP awards primarily with cash instrument hedges whereby changes in the fair value of such hedges, net of financing costs, were recorded in net revenues.

The use of derivatives as cash flow hedges of certain DCP awards is expected to substantially mitigate timing differences between the recognition of changes in the fair value of the hedging instruments and the deferred recognition of related DCP compensation expense over the vesting period. The expected mitigation of these timing differences, alongside the associated income statement changes described above, enables us to better present the operating performance and revenue trends. Accordingly, we no longer present non-GAAP financial measures excluding DCP.

For additional information on DCP, refer to “Other Matters” herein and Note 2 to the financial statements.

Tangible common equity is a non-GAAP financial measure that we believe analysts, investors and other stakeholders consider useful to allow for comparability to peers and of the period-to-period use of our equity. The calculation of tangible common equity represents common shareholders’ equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction. In addition, we believe that certain ratios that utilize tangible common equity, such as return on average tangible common equity (“ROTCE”) and tangible book value per common share, also non-GAAP financial measures, are useful for evaluating the operating performance and capital adequacy of the business period-to-period, respectively. The calculation of ROTCE represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average tangible common equity. The calculation of tangible book value per common

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Management’s Discussion and Analysis

share represents tangible common equity divided by common shares outstanding.

The principal non-GAAP financial measures presented in this document are set forth in the following tables.

Reconciliations from U.S. GAAP to Non-GAAP Consolidated Financial Measures

1. Net revenues and compensation expense are adjusted for DCP for both Firm and Wealth Management business segment. Beginning in the first quarter of 2026 we use derivatives to hedge our DCP awards and no longer present non-GAAP financial measures adjusted for mark-to-market gains and losses on DCP. See “Other Matters” herein and Note 2 to the financial statements for more information.

Non-GAAP Financial Measures by Business Segment

1. Average common equity and average tangible common equity for each business segment is determined using our Required Capital framework (see “Liquidity and Capital Resources—Regulatory Requirements—Attribution of Average Common Equity According to the Required Capital Framework” herein). The sums of the segments’ Average common equity and Average tangible common equity do not equal the Consolidated measures due to Parent Company equity.

2. The calculation of ROE and ROTCE by segment uses net income applicable to Morgan Stanley by segment less preferred dividends allocated to each segment, annualized as a percentage of average common equity and average tangible common equity, respectively, allocated to each segment.

Return on Tangible Common Equity Goal

We have an ROTCE goal of 20%. Our ROTCE goal is a forward-looking statement that is based on a normal market environment and may be materially affected by many factors.

See “Risk Factors” and “Forward-Looking Statements” in the 2025 Form 10-K for further information on market and economic conditions and their potential effects on our future operating results.

ROTCE represents a non-GAAP financial measure. For further information on non-GAAP measures, see “Selected Non-GAAP Financial Information” herein.